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Friday, March 31, 2017

On March 2nd, in announcing a plan to push electricity costs off into the distant future, the 63.8 year-old Premier of Ontario stated:

In the past few years we've invested more than $50 billion in electricity infrastructure -- new dams in the south, new towers in the north, $13 billion to refurbish nuclear power plants alone and billions more to ensure new transmission and distribution lines everywhere. These are enormously important assets that meet the demand for cleaner and reliable power everywhere in the province. These are assets that belong to all the people of Ontario and that will serve us for many decades to come.

Since that time a lot has been written on the Premier's plans. This post will note works I found substantial, particularly those that try to account for the $50 billion "we've" invested. One other aspect that has to be mentioned in discussing the Premier's "Fair Hydro Plan":

We needed to rebuild the system and so we went to the bank for that money. But the terms that were set weren't fair -- particularly the amortization. Instead of paying off the mortgage over 30 years, we agreed to a term of 20.
In effect, this generation has been subsidizing not just those who came before, but those who will come next. That's not right -- and it has been notably unfair on today's hydro users. So we're fixing that. We're refinancing the mortgage and setting a new term that stretches over a longer period. Over time, it will cost a bit more. And it will take longer to pay off. But it is fairer

The chart shows currently operating capacity (likely as of the end of 2015) still anticipated to be "under contract" in 2035: most is hydro, and most of that is publicly owned OPG's generators. Adding recently re-contracted Mattagami sites to OPG's 100% public generators explains 94% of the waterpower shown for 2035. The nuclear showing in 2035 is Bruce Power's refurbished units 1 and 2.
I've now explained 93% of all the generating assets that were in service (likely at the end of 2015) that will remain "under contract" by 2035.

Of the contracted sites, Bruce nuclear reactors are contracted for an expected 31 year life, and the Mattagami waterpower sites have 50 year contracts. Of the generation assets that will still be under contract or owned in 20 years, most were built by generations that preceded the Premier's, and those that don't already have longer payment periods factored into existing contracts.

The National Energy Administration (NEA) has issued red alerts, or the highest warning, in six provincial regions where new wind power projects will be prohibited this year...The six restricted regions include Heilongjiang, Jilin and Gansu provinces, as well as Inner Mongolia, Ningxia Hui and Xinjiang Uygur autonomous regions...Large amounts of wind power were wasted in these regions last year...According to official data, last year the waste proportion of these regions were Gansu (43 percent), Xinjiang (38 percent), Jilin (30 percent), Inner Mongolia (21 percent), Heilongjiang (19 percent).

Wind power facilities generated 241 billion kilowatt hours of electricity in 2016...However, close to 50 billion kilowatt hours of wind power was wasted, up from 33.9 billion kilowatt hours a year earlier, due to distribution of wind resources and an imperfect grid system.

In Ontario, the IESO doesn't seem as advanced as the Chinese NEA so is yet to release an official curtailment figure, but I've got estimates!

Thursday, March 2, 2017

The Premier of Ontario, and its Minister of Energy, held a news conference today in which they promised to cut electricity bills by 25 per cent - on average, inclusive of an 8% sales tax rebate already introduced. A Fair Hydro Plan is touted as offering these "new" things:

Starting this summer, electricity bills will be reduced by 25% on average for households across Ontario. Many small businesses and farms will also benefit from this cut.
And bills won’t increase beyond the rate of inflation for at least four years.
People who live in eligible rural communities and those with low incomes will see even more reductions to their electricity bills.
Taken together, these changes will deliver the single-largest reduction to electricity rates in Ontario’s history.

Introducing an affordability fund to help those customers in need, and

Introducing a First Nations electricity rate.

The move to fixed delivery charges is one I approve of, but it may be of limited interest as it impacts individual consumers (the higher consumption user, including farms, benefit at the expense of low consumption residences).

In the remainder of this post I'll pull some evidence together to speculate on how the government intends to reduce the global adjustment charge by 20 per cent, and the implications of doing so.